Mobility that Makes Sense

July 1, 2016
GM’s launch of a ridesharing service and $500 million investment in Lyft is just the beginning of a shift in the way automakers will operate

A study done by the Boston Consulting Group (BCG) reported that there are 5.8 million people worldwide who currently car share. That number is expected to reach 35 million by 2021. With car sharing increasing, the number of vehicles per household will likely drop, creating fewer vehicles for repair shops to work on, says Donny Seyfer, chairman of the Automotive Service Association and owner of Seyfer Automotive in Wheat Ridge, Colo. This trend toward car sharing is forcing OEMs and shops to rethink the way that they do business, but it’s not as ominous as some might think, according to Annalisa Esposito Bluhm, communications manager for GM’s new car-sharing service Maven. There are opportunities for shops to turn car sharing into a profit center.

“Shops will have a massive opportunity from a fleet perspective,” she says. “Those fleets will need routine maintenance and could actually be a boom for business.”

GM’s Investment in the Future

With the rise of car sharing and connected cars, the way people interact with vehicles is changing and in order to adapt, the industry will need to rethink how it does business in order to stay relevant, according to Bluhm. And General Motors is at the forefront of this push. An example of this is Maven, part of the automaker’s plans, announced in October by CEO Mary Barra, to capitalize on the future of personal mobility by focusing on car sharing and connected cars. Then GM invested $500 million into Lyft.

Although there is overlap between GM’s investment in Lyft and the launch of Maven, the initiatives serve separate purposes for the automaker, Bluhm explains. The decision to partner with Lyft came out of a desire to partner with a company that was also invested in an autonomous future. Bluhm says that partnering with the rideshare company was seamless. Maven, on the other hand, is part of GM’s investment to revolutionize public transportation beyond autonomous driving. The focus of Maven is to create a multi-mobile solution that brings mobility to people in urban centers, Bluhm says.

The Appeal of Ridesharing

“In my opinion, it goes back to what the heart of what GM is based on: transportation and freedom,” Bluhm says. “The way we were able to express that before was a car in the traditional sense. Now through technology, we have so many more ways to provide this.”

GM is concerned with getting its consumers from point A to point B in the way that makes the most sense for them, Bluhm explains. This means that vehicle ownership in the traditional sense may look very different than it has in the past. Susan Shaheen, co-director of the Transportation Sustainability Research Center (TSRC) and adjunct professor in the Department of Civil and Environmental Engineering at the University of California, Berkeley, says that the shift can be attributed to factors such as the increase of urban living and millennials’ willingness to use alternative modes of transportation. With all of these factors, Bluhm says it’s just a matter of time before all of the OEs invest in fleets of ridesharing vehicles.

A Rising Trend

Maven is not the only ridesharing company to emerge from a major auto manufacturer. Daimler, the Mercedes-Benz parent company, has car2go, and BMW has DriveNow. These companies just add to the plethora of choices that already exist, including Zipcar and Uber.

This shift will change the landscape of the auto industry, and not necessarily in a bad way, according to Bluhm.

Impact on the Industry

An April report from Business Insider points out that car sales may actually increase due to the extra amount of driving that “professional” drivers of services like Lyft and Uber put on their vehicles. The average age of vehicles on the road today is at an all-time high of 11.5 years, according to the U.S. Department of Transportation, but Deutsche Bank analysts estimate that car-sharing vehicles will average only three years. The increased mileage and use will cause cars to wear out quicker and increase the need for replacement, according to the analysts.

How can shops and OEMs prepare for the new world of automotive? It’s all about being flexible and collecting information, Bluhm and Shaheen agree. The technology in cars that will allow for ridesharing, like keyless entry and bluetooth, is something that shops need to educate themselves on and be ready for, Bluhm says.

“The industry needs to continue to research, invest, and experiment with innovative technologies and mobility solutions to understand what customers want and what works,” Shaheen says.

Opportunities for Shops

GM is currently weighing different options for where Maven will service its fleet. With more OEs hopping on the car sharing bandwagon each day, offering maintenance to fleet services is a massive opportunity for both dealerships and independent shops, Bluhm says.

Bluhm explains that GM is looking for partners that can handle the volume, which will give dealerships the edge. While MSOs and dealers may have an advantage, Seyfer says not all is lost for independent shops.

“People like to do business with people they know and like,” he says. “For decades, the main value proposition that independents bring to the table is that personal touch point and advocacy for the customer. I think that if I were trying to compete for a fleet business, I would identify things that I could bring to the table that larger organizations may not.”

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